We have heard so much about residential leases over the past few years, and most investors are now familiar with the 30 year lease agreement which can be registered at the land office. What about a lease for commercial premises? Under the Civil & Commercial Code, leases up to 50 years can be registered at the Land Office for commercial purposes only, however this is where it gets complicated; what constitutes commercial use? It appears that hotels, offices, guest houses, up market bistros are not considered commercial and do not qualify under the commercial usage definition. Leases of 50 years or less are approved only if the premises is described as a factory of sorts, for example manufacturing, information technology, and any other type of manufacturing work. The Land Office will interpret each case as it comes, and the definition can change day to day, it really depends on the land officer on the day and what their view is on commercial activity.
Commercial leases as well as residential leases will vary in terms of the general layout of the lease. Commercial leases will contain an array of restrictive and positive covenants which the commercial lessee will need to obide by in order to comply with the lease terms. There is also the possibility to renew the lease just before the expiry date in the original lease, however the Civil & Commercial Code clearly states that any renewal clause is merely contractual in nature and not a recognized right under Thai law, hence it may be difficult to enforce such rights in court.
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